HMRC Tax Problem Advice

If your company is having problems meeting its tax bill, you may be able to agree an arrangement with HMRC that enables you to pay your tax in instalments over a longer period of time. This is called a Time to Pay (TTP) arrangement.

If you are unable to make a tax payment when it is due, whether it is VAT, late PAYE / NICs, corporation tax or self-assessment income tax, you should contact HMRC as soon as possible.

If you have received a tax bill from HMRC that you are simply unable to pay, it’s essential you contact HMRC immediately to try and reach some sort of payment arrangement.

The tax gap, the difference between the tax HMRC believes is due and the tax it collects, is estimated at 6.4 per cent for the tax year 2024 to 2025.

Most company directors are probably well aware of the statutory redundancy payments their employees can claim if they have been working for the business for at least two years, but many directors are unaware that they may also be entitled to claim.

One of the weapons in HMRC’s arsenal is the ability to issue an organisation with a Notice of Requirement for VAT security where it believes there is an increased risk VAT will go unpaid.

HMRC’s objections to a strike-off application can be disappointing for directors who are genuinely trying to close down a failed venture and not deliberately avoiding paying tax.

If you or your company are unable to pay your VAT debt then it is important that you recognise that HM Revenue & Customs (HMRC) will not allow this position to continue indefinitely. Interest runs from the due date while the debt is unpaid. Late payment penalties build at set points, but they can be avoided or reduced if you agree time to pay with HMRC early. Both increase your business costs at a time when you will want to reduce outgoing costs.

It is your responsibility to make sure your VAT is filed on time and any payment due is made before the deadline. Fail to do so and a range of different actions can be taken against you.

Importantly, the deadline for submitting your VAT return online and the deadline for paying HMRC any VAT you owe are usually the same date. If you pay by Direct Debit, HMRC collects the payment a few working days after the deadline. If you use the Annual Accounting Scheme, you make interim payments on different dates from your return. If you’re not sure when your VAT return and payment deadline is, you can check that in your VAT online account.

If you can’t pay your VAT on time or in full, you should call HMRC’s VAT payment problems line on 0300 200 3831 (Monday to Friday, 8am to 6pm) immediately to make them aware of the situation.

If you are registered to pay VAT then it is your responsibility to make sure your returns are submitted and paid on time.

As a taxpayer, it is your responsibility to make your PAYE and VAT payments on time. HMRC does not send reminder letters before PAYE or VAT payments become due, so you must be aware of the deadlines.

If you are a business owner facing financial pressure and are having trouble paying HMRC, you may have accumulated arrears of tax in relation to Pay as You Earn (PAYE) and National Insurance Contributions (NIC). HMRC have a strict process and various powers in dealing with late payment and are able to quickly identify late payers.

Corporation tax is no longer a single rate. The main rate is 25 per cent and the small profits rate is 19 per cent, with Marginal Relief between the two.

HMRC has the power to seek the recovery of National Insurance contributions (NICs) from an officer of the company personally where the failure to pay appears to HMRC to be due to fraud or neglect by that officer.

One of the primary reasons people choose to turn their company from a sole proprietorship or partnership into a limited company (ltd) is the extra protection this type of corporate structure affords.